An effort by Mayor John DeStefano Jr. to pass new safeguards against high-cost loans may mean that predatory lenders in New Haven are living on borrowed time.

Following up on a bill passed by the Connecticut General Assembly last year designed to stamp out “abusive home loans,” DeStefano has renewed the attack on lenders in the Elm City who offer subprime loans — those with above-market interest rates — on unfavorable terms to borrowers.

“Consumers are being taken advantage of, and it’s an opportunity for us to make changes,” DeStefano said.

While subprime loans are not necessarily bad — they allow individuals with bad credit to take out loans — they can have a damaging effect on low-income borrowers, especially in cases where the borrowers are not fully aware of the terms of the loan or are eligible for prime lending rates.

One study published in 2000 cited 419 instances of subprime loans made by 45 different lenders in the New Haven area, said Rob Smuts ’01, an adviser to the mayor.

The bill passed unanimously by the state Legislature last year requires greater disclosure by lenders and excludes certain predatory practices, but as of last month, no official complaints had been brought under the new act.

Smuts said that while the bill’s passage demonstrated a broad consensus for a minimal level of protection, the resulting statute “has no teeth.” In addition, one of the act’s key provisions was struck down by the courts.

“We’re looking to talk to some allies in the Legislature and tack on something to the existing legislation,” Smuts said.

DeStefano has previously worked to curb predatory lending through his association with the National League of Cities, which he will preside over next year. The mayor also cooperated closely with Maryland Sen. Paul Sarbanes in drafting the “Predatory Lending Consumer Protection Act,” which is currently in committee on Capitol Hill.

The mayor’s office has not yet decided on any specific plan to improve homeowner protection, but the city is looking closely at measures that other states and municipalities have taken to improve borrower safety, Smuts said. In particular, New Haven is considering a model developed by Oakland, Calif., that emphasizes prevention rather than law enforcement.

A prevention-based approach would likely require borrowers to receive counseling from the federal Department of Housing and Urban Development or state and city advisers before taking out high-cost loans, Smuts said. Such counseling would help prevent low-income borrowers from entering into loans with excessively high rates or stringent terms.

In one recent case, the Community Remodeling Co. allegedly targeted between 200 and 300 homeowners in the New Haven area who were seeking to take out loans for home improvements. In most cases, the victims were “cash poor but equity rich,” said Julie Robie LAW ’04, who helped provide legal counseling for some of the borrowers through a consumer rights’ program operated by the Yale Law School.

Robie also said that predatory lending has become a much more important issue as subprime lenders have filled a vacuum for borrowers — especially in low-income, minority neighborhoods — who have not historically had access to any other loans.

“It’s on the cutting edge in terms of poverty law or consumer rights law,” Robie said.

Many people in the New Haven community have expressed disappointment with the state’s efforts to provide effective safeguards for low-income borrowers.

Robert Solomon, a Yale Law School professor and the former director of the New Haven Housing Authority, said he received “virtually no help from the state’s attorney’s office” in attempting to gain restitution for victims of predatory lending he has represented.

He said that the state should not only provide civil remedies for victims but insist on full restitution in criminal cases involving predatory lenders.

“We have been extremely disappointed in the enforcement of existing statutes by the state of Connecticut — and I use the word ‘extremely’ as an understatement,” Solomon said.